Tuesday, September 13, 2011

ECC-FAUGH at 1

Yesterday was the first anniversary of the ECFA coming into effect. Focus Taiwan carried an Economic Daily News piece on that day that will live in commentary. The piece argues that...

-- recent gains in position in the WEF, BERI and other rankings are due in large part to the ECFA signing.

-- "Official statistics" also show the impact of ECFA early harvest program:

For instance, China's customs tallies showed that imports of Taiwanese products on the "early harvest" list posted 22 percent annual growth in the first seven months of this year, far higher than the 9.6 percent growth of overall imports from Taiwan during the same period. Similarly, Taiwan's imports from China also increased significantly in the same period, particularly those on the "early harvest" list.

Anyone got a problem with them sourcing Chinese stats on the success of a pro-China program? I'd like to see the counterpart stats from Taiwan as well as some independent analysis.

-- benefits have not reached the majority of the population. Indeed the previous week DGBAS, Taiwan's main gov't economic statistics office, reported that agricultural incomes had fallen to their lowest levels in five years. Declining farm prices are hitting farmers, say observers, and such income growth that farmers experience comes from non-farm incomes.

As for agricultural profits for farming families, after the Council of Agriculture modified the DGBAS figures, the figure stood at NT$193,000, declining 8 percent in about two years and representing NT$3,000 less than last year.

Assuming 3.5 persons for each farming household, per-person income did not amount to NT$55,000 last year, the report said, adding that accounting for those who had left their fields fallow all year, income on agricultural products was only NT$130,000 annually, with total family income at NT$869,000.
Huang Kun-pin (黃崑濱), better known as “Uncle Kun-pin,” said farming was a profession that was “hard both during a good harvest and a bad crop,” adding that if it were not for the NT$6,000 farmers’ subsidy, he did not know what he would live on.

Turning to comments by Council of Agriculture Deputy Minister Huang Yu-tsai (黃有才), who has said that “farmers only work an hour a day,” Huang Kun-pin said he would invite the deputy minister to experience first-hand how farmers live.

Chuang Yu-chih (莊有志), an award-winning rice farmer, said while he had turned 62 this year, he was the youngest farmer in the village.

ECFA had contained sweeteners aimed at farmers, as Beijing crowed, and at convincing southerners to give up their objections to becoming a colonial holding of Beijing after being a colonial holding of Taipei for so long. These have not been successful, as the numbers indicate. It seems intuitively logical that if market share is expanding but incomes are falling, the benefits must be going to middlemen. Or the stats are wrong because Beijing is lying or (more likely) there are lots of fake Taiwan agricultural products in China.

The Economic Daily News editorial also pointed out that further negotiations have stalled. Worse, Taiwan's share of the China market is falling, and the inbound investment ECFA promoters promised has not materialized. Instead, as many of us pointed out, it has simply accelerated investment from Taiwan into China -- which, after all, was one of Beijing's goals for the agreement.

No FTAs as of yet -- remember when we had to have ECFA so we'd avoid being left behind? Now we have ECFA but are losing market share in China. Sure.
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4 comments:

richard
said...

regarding Michael Cole's piece - i am quite familiar with similar stories in Poland in the 90s. at least our intelligence was up to the task and was counteracting. they were actually quite furious about it.but we did not and still do not have much business with the Chinese, so not much at stake ... except maybe honey traps

The Commonwealth article you linked needs to have the journalist actually go to the places he is writing about. Taking the word of the guy who runs it that 85% of the largest industrial park is occupied when over 50% of it is empty is just sloppy. The Xianxi part is even emptier than the Lugang.

A commenter at the bottom of Cole's citizen article: "Sounds more to me like with Dechert being the primary intiator [sic] that he is the spy and she was the target since her response to his emails were plain and professional. Not sure how some commentors [sic] have twisted this logic into another conclusion."

The commenter could be spot on. Cole is interpreting too much. He claims that not firing Dechert is premature. Cole is premature. Cole could be spot on with his suspicions, or he might not be. But suggesting that Dechert be fired without looking into it first is unfair, to say the least. I believe Dechert when he says his emails were merely flirtatious. The cbc.ca/news article revealed merely that, when it quoted from the emails, which the Xinhua reporter's husband hacked into (or so it is claimed).I believe I know the type of character Dechert is: prone to faux pas and silly over-the-top flirtatious attempts to be charming (and easily charmed), but cautious enough not to reveal the things with which he is entrusted. There are many, many people like him. If Dechert is the type of character I think he is, then Cole is making a mountain out of a molehill by demanding he be fired. The Maxim Bernier case was a whole other kettle of fish. Leaving important documents lying around with an ex-girlfriend of biker gang minions was serious business, and Harper was right to fire him.

It's great that you have a strong grasp on the macroeconomic effects of ECFA on Taiwan investments.Microeconomic effects don't matter as much, because sure some producers should benefit, but how does ECFA affect investments, employment, and salaries?

Taipei Times' piece has the statistics you talked about:http://taipeitimes.com/News/editorials/archives/2011/05/14/2003503178/2Judging the ECFA’s effects a year on

Over the past 10 years we saw the largest relocation and outsourcing of Taiwanese industries and saw salary levels regressed to more than 10 years ago while unemployment rate is higher than the other 3 Asian Tigers. It's pretty clear the current model of closer economic ties with China has not brought most Taiwanese substansive economic benefits.

On the contrary, Korea has not merely focused on China but sought to penetrate advanced countries and its FTAs with EU and US will soon to be approved.

If FTA with China is so great, why hasn't most advanced nations sign with China? Instead we hear more foreign anti-dumping and anti-company merger measures against China. Other nations are averse to Chinese competition, which may be unfair. The countries that signed FTAs with China are those less or similarly developed (Southeastern nations), with construction raw materials to export (Australia), or without manufacturing industry (Singapore). So advanced nations don't consider FTAs with China are on the whole beneficial, but detrimental.

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